Info Service on WTO and Trade Issues (Feb18/10)
7 February 2018
Third World Network
Brazil seeks "structured discussions" on investment facilitation
Published in SUNS #8615 dated 6 February 2018
Geneva, 5 Feb (D. Ravi Kanth) - Despite the rejection of multilateral
discussions on the controversial issue of investment facilitation
at the eleventh ministerial meeting (MC11) in Buenos Aires nearly
two months ago, Brazil has chosen to fire the first salvo for "structured
discussions on investment facilitation" at the World Trade Organization.
More than 90 countries, including India, South Africa, and the United
States among others, rejected any further discussion on IF (investment
facilitation) at the heads of delegations meeting during the Buenos
Aires ministerial on 12 December 2017.
Immediately after they failed to secure multilateral consensus at
the heads of delegations meeting, 70 countries, led by Argentina,
Brazil, and China among others announced the proposed plurilateral
initiative on investment facilitation.
In a four-page communication dated 31 January 2018 to the General
Council, Brazil said 70 members circulated a joint ministerial statement
on the margins of the Buenos Aires meeting calling for the beginning
of "structured discussions with the aim of developing a multilateral
framework on investment facilitation."
The structured discussion, according to Brazil, will address the following
i. A multilateral framework of principles and rules for facilitating
sustainable investment flows as a means of promoting the economic
growth of all trading partners and the development of developing countries;
ii. The importance of ensuring coherence regarding the legal framework
applicable to the facilitation of investment in services and non-services
iii. To provide investors with a transparent, predictable and efficient
regulatory and administrative framework;
iv. To facilitate the dialogue between governments and investors on
matters related to investments;
v. To stimulate mutually-beneficial business activity;
vi. To facilitate the increasing participation of developing countries
in investment flows including, inter alia, through the strengthening
of their domestic regulatory environment and its efficiency and competitiveness.
Brazil issued several caveats saying the structured discussions on
IF will not apply to:
(a) Government procurement;
(b) Public concessions and the conditions thereby established, provided
that the Agreement applies to investments made as a result of concessions;
(c) Market access and right to establish, provided that nothing in
this Agreement shall be construed as to modify members' obligations
and commitment under the General Agreement on Trade in Services (GATS).
Further, it argued that the proposed agreement will not cover "any
dispute resolution procedure not foreseen under the dispute settlement
understanding, according to Article 20.6 of the DSU," and "investment
Significantly, Brazil maintained that "a member's obligations
under this [Investment Facilitation] Agreement shall apply to measures
adopted or maintained" by the national government or any national
Brazil also listed other provisions such as "most-favoured nation
treatment", "right to regulate," "electronic documents,"
"transparency," and "institutional governance."
Brazil's proposal for structured discussions on investment facilitation
includes 20 articles.
Although Brazil has stated that 70 countries endorsed the plurilateral
initiative on investment facilitation, it has not listed all the countries
in its latest proposal.
There are doubts whether all the 70 countries that signed off on the
plurilateral initiative on investment facilitation still continue
to support the structured discussions, said a trade envoy who asked
not to be quoted.
China is the major demandeur for investment facilitation along with
Brazil, Argentina, Nigeria, and MIKTA (Mexico, Indonesia, Korea, Turkey,
and Australia) countries among others.
Last year, the US had blocked any discussion on investment facilitation
at the G20 sherpas meeting.
Consequently, the issue did not even remotely figure at the G20 leaders'
meeting in Hamburg last year.
On 10 May 2017, India had blocked the proceedings of the General Council
for listing investment facilitation on the agenda.
The chair for the General Council, Ambassador Xavier Carim of South
Africa, was forced to hold consultations to break the impasse. Later,
he had issued a compromise statement suggesting that the issue will
not form part of the GC agenda.
Ambassador Carim's statement which recalled the July 2004 framework
agreement as well as paragraph 34 of the Nairobi ministerial declaration
suggested that "the proponents [of investment facilitation] seek
to share information on informal dialogues on investment facilitation,
and that the communications do not constitute proposals for negotiations."
In short, the GC chair's statement made it unambiguously clear that
investment facilitation can only be discussed informally outside (the
WTO) without any specific mandate, said a trade envoy who asked not
to be quoted.
Citing the objections raised by India, South Africa, Uganda, Venezuela
and other countries, the chair said "some members believe that
investment facilitation does not lie within the scope of the WTO and
hence the General Council."
At the GC meeting on 18 May 2017, India issued a strong statement
against investment facilitation stating that discussions on investment
facilitation go against the very principles set out in the Marrakesh
Agreement for establishing the WTO.
Discussion "on Investment Facilitation does not fall within the
ambit and scope of the WTO and hence the General Council or any of
the formal structures of the WTO since Investment Facilitation does
not concern multilateral trade relations," India had said at
the same GC meeting. (See SUNS #8466 dated 19 May 2017).
At the WTO's eleventh ministerial conference in Buenos Aires, a large
majority of countries strongly opposed investment facilitation following
which around 70 countries went out of the room to issue a joint statement
that has no bearing on the WTO, said a trade envoy who asked not to
Against this backdrop, Brazil's latest attempt to start structured
discussions on investment facilitation at the General Council is a
concerted attempt to "plurilateralize" the WTO, the multilateral
trade body, said a trade envoy who asked not to be quoted.
Brazil, which is hitherto known as the champion of developing countries
for reforming global trade through the G20, has now changed course
by being the front runner for investment facilitation in a matter
of 16 years.
Worse still, without resolving any of the substantial issues in the
global farm trade, particularly the trade distorting domestic subsidies,
the permanent solution for public stockholding programs for food security,
the continued tariff peaks and tariff escalation, the special safeguard
mechanism for developing countries, and several other issues, Brazil
has now embarked on investment facilitation, which will undermine
its credibility in the global trade negotiations, according to several
trade envoys who asked not to be quoted.
Knowing full well that investment facilitation is a replica of the
failed effort at a Multilateral Investment Agreement promoted by the
Paris-based Organization for Economic Cooperation and Development
(OECD), Brazil, the country that founded the G20 for developing countries
to reform global agricultural trade in July 2003, can now create a
G20 for investment facilitation, said a trade envoy who asked not
to be quoted.